Khatkar v Customs and Excise [2005] UKVAT(Excise) E00865 (6 April 2005) 

EO865
EXCISE DUTY – Restoration of seized vehicle – Restoration of seized goods - Reasonableness of decision not to restore – Vehicle carrying 900 litres of beer when seized – Appellant claimed that his one-third share was for consumption at his daughter’s 7th birthday party – Whether decision not to restore reasonable – Yes – Appeal dismissed – FA 1994 s 16(4)

LONDON TRIBUNAL CENTRE

            LAKHBIR KHATKAR	Appellant

-	and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

		Tribunal:	STEPHEN OLIVER QC (Chairman)
				MRS R A WATTS-DAVIES  

Sitting in public in London on 15 March 2005

The Appellant in person

G C Facenna, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1.	Mr Lakhbir Khatkar appeals against a decision of the Commissioners not to offer for restoration a LDV Minibus vehicle (“the vehicle”) and excise goods comprising 300 litres of beer (“the goods”), seized from Mr Khatkar on 29 January 2004 (“the Decision”).  The Decision followed a review and was communicated to Mr Khatkar by letter of 16 March 2004.  

2.	On 29 January 2004 the vehicle had been stopped at Dover Eastern Docks.  Mr Khatkar was driving and there were two passengers in the vehicle, Michael Ross and Gary Phillips.  Following an interview of Mr Khatkar and the two passengers, the officer of the Commissioners seized the vehicle and the excise goods as liable to forfeiture.  The total excise goods in the vehicle comprised 75 mixed cases of beer amounting in all to 900 litres.  The revenue on those goods amounts to £850.  

3.	At the hearing, Mr Khatkar’s explanation for his purchase of the 300 litres that belonged to him was that these had been for use at a party that he was to give to celebrate his daughter’s 7th birthday.  He explained that he was capable of drinking between 15 and 24 cans a day.  His contention, therefore, was that the 300 litres seized from him was either for his own consumption or for the consumption of his guests.  

The circumstances surrounding the seizure

4.	When stopped, Mr Khatkar explained that he had been to Calais for some beer. He had said that the vehicle belonged to him and that he had owned it since November 2003.  He accepted, when asked, that he knew of the prohibitions and restrictions on importing goods into the United Kingdom.

5.	Mr Khatkar went on to assert that his two passengers had had to return 15 cases of beer to a warehouse in Calais because they had been out of date when purchased.  He handed the officer three receipts from a warehouse called “Palace Drink”.  He explained that he had last travelled to Calais the previous Sunday.  It was on that occasion that they had bought the out of date beer.  He said that he had last travelled to buy beer on some date before Christmas 2003.  He said, in answer to the question of how many times he had travelled to Calais, that he owned a warehouse in Calais and as a result he travelled across a lot.  When asked again how often he had travelled, he said that he had been to Calais about five times in the last few months and that his passengers also had travelled to Calais about five times.  

6.	When interviewed Mr Khatkar explained that he had 20 cases of Special Brew and 5 cases of Stella which had cost about £350.  He once again stated that he had a “cash and carry” in Calais though it was not in his own name.  That was the reason why he kept going over to Calais.  The purpose of the present trip had been to sort out a few details about its VAT registration; the business had, he said, been transferred to Calais from Paris within the last few weeks.  The present visit had been for the purpose of buying beer for his daughter’s birthday party.  In the course of the interview he stated that he might have made as many as eight trips to Calais in the last month.  

7.	Asked more about his interest in the business, he stated that his investment had come out of a payment received from Ford Motors (some £16,000) that had been paid to him when he left employment.  His only financial commitment, he said, was a £300 amount mortgage payment as his wife looked after his baby and his mother, who lived with him and his wife, sorted out food and utility bills.  

8.	Mr Khatkar accepted that he had been stopped by Customs before.  Sometimes, he said, he had taken a trailer so as to move beer to the cash and carry.  He could fit 120 cases in his trailer.  

9.	When Mr Khatkar was being interviewed, the other two passengers (Michael Ross and Gary Phillips) were also interviewed and provided additional information about the vehicle and the goods.

10.	The Customs officers formed the view that the excise goods imported by Mr Khatkar and his two fellow passengers were being held or used for a commercial purpose.  They were therefore seized as liable to forfeiture under sections 49 and 139 of the Customs and Excise Management Act 1979 (“CEMA”), being imported goods chargeable on their importation with customs or excise duty, that had been unshipped without payment of that duty.  The vehicle was also seized as liable to forfeiture under section 141(1)(a) of CEMA as a vehicle that had been used for the carriage, handling, deposit or concealment of goods liable to forfeiture. 

Application for restoration

11.	Mr Khatkar had written to the Customs seeking restoration of the goods and the vehicle.  The Commissioners’ initial decision had been not to restore the goods, but that the vehicle would be offered for restoration upon payment of £850.51, representing the loss of duty on the goods.  In the course of the review, the review officer (Mrs D C Gillespie who gave evidence at the hearing), took the decision that neither the goods nor the vehicle would be offered for restoration.  She took into account the fact that the amount of beer being imported was substantially greater than the guide level of 110 litres.  She took into account the fact that he had told the officer that he had made some eight trips to Calais during the month of January 2004 but had not imported beer on the previous occasions.  This she did not find plausible.  She noted that, according to departmental records, Mr Khatkar had been intercepted in July 2001 with a large quantity of beer and in October 2001 he had been stopped with 1,620 litres of beer which had been seized.  In November 2001 he had been intercepted in a vehicle with three other people and his share of the beer was 200 litres.  In March 2003 he had been intercepted in a minibus carrying 1,200 litres of beer.  In May 2003 he had been stopped in the same vehicle with 90 cases of beer which he had claimed were for a party.  In September 2003 he had been intercepted in the same vehicle transporting 720 litres of beer.  In November 2003 he had again been intercepted transporting 600 litres of beer.  In December 2003 he had been intercepted with 360 litres of beer and had claimed to have been looking for work in France.  The records showed that Mr Khatkar and his passengers had travelled to Calais on many other occasions.  The officer took the view that on the balance of probabilities it was likely that he had been importing beer on most of those other trips.  

12.	The review officer took into account the fact that Mr Khatkar had produced no evidence that he had any interest in a cash and carry store in Calais. She found the story totally implausible.  In any event it provided her with no explanation as to why he should have been bringing beer back from Calais into the United Kingdom.  She also took into account the fact that Mr Khatkar had stated that he had not received any income from the cash and carry.  If this had been the case, she reasoned, how could he have afforded to travel to France twice a week without financing his trips from the sales of imported beer?  She was unable to accept as plausible his explanation that the beer imported on 29 January 2004 had been for his daughter’s 7th birthday.

13.	In all those circumstances it was her view that the seized goods should not be restored, nor should the vehicle.  

The Commissioners’ Case

14.	The case for the Commissioners was that the decision not to restore the goods and the vehicle should be upheld on the grounds that the disputed decision was, in all the circumstances, reasonable.  In particular the decision was justified in the light of (i) the amount of the excise goods being imported and the amount of excise goods imported or seized on previous occasions, (ii) the large number of cross-channel trips made by Mr Khatkar and his two passengers in the previous twelve months and (iii) the implausible explanation given for the importation of the goods.  Also to be taken into account as relevant circumstances were the discrepancies or material omissions from the information supplied by Mr Khatkar to the interviewing officer;  the explanation about the cash and carry was implausible and was not supported by any evidence.

Conclusion

15.	It seems to us that the decision of the Commissioners not to restore the excise goods and the vehicle to Mr Khatkar was reasonable in all the circumstances.  In reaching this conclusion we take into account the fact that the quantity of beer was substantially in excess of the guideline level.  We also take into account the fact that Mr Khatkar had a history of importing large quantities of beer.  He had been stopped on numerous occasions and had had goods seized several times.  This was also true of his two travelling companions.  Bearing in mind that Mr Khatkar had been found to have been importing large quantities of excise goods on the occasions when he was stopped, it was, we think, reasonable to conclude that Mr Khatkar had been importing large quantities on those other occasions when he had not been stopped. 

16.	It seems to us that the officer was entitled to dismiss Mr Khatkar’s explanation that he owned a cash and carry in Calais to which he travelled on frequent occasions.  There was no evidence to support this and an investment of £16,000 (which Mr Khatkar asserted he had made) would surely have been supported by some hard evidence.  What is more Mr Khatkar was well aware of the relevant law and the guideline amounts.  

17.	Taking into account the discrepancies in the information provided by Mr Khatkar to the Customs and the vagueness and contradictory nature of the answers provided in the course of interviews, it seems to us that the review officer was quite entitled to act as she did.  Moreover the explanation offered by Mr Khatkar that the beer was being imported for the party for his seven year old daughter was so improbable as to be disregarded as an explanation for his importation of 300 litres on 29 January 2004.  Taking everything into account and in particular the expense involved and the financial situation of Mr Khatkar, the officer was, we think, entitled to conclude that the excise goods were being imported for the purpose of sale or to profit and in order to fund further commercial purchases.

18.	We recognize that Mr Khatkar’s personal consumption of beer may be very high indeed.  It is not impossible that he was planning to consume part of the goods being imported.  Nonetheless, having regard to the large quantities of beer imported on this and earlier occasions, it was an entirely reasonable conclusion that the excise goods were, as to a substantial part, being imported for the purpose of onward sale at a profit in order to fund Mr Khatkar’s own personal needs as well as his further commercial purposes.

19.	We cannot see that there were any exceptional circumstances that the review officer should have taken into account.  In essence, we think that she took into account all the relevant considerations including the personal circumstances of Mr Khatkar.  We do not think that she took into account any irrelevant factors when arriving at the decision to refuse restoration of the excise goods and the vehicle.  The decision appealed against is, in our view, neither unreasonable nor disproportionate and is not a decision that “could not reasonably have been arrived at” within the meaning of section 16(4) of Finance Act 1994.  We therefore dismiss the appeal.

Costs of the previous hearing

20.	A hearing of the appeal had been listed for 31 January 2005. The tribunal records showed that Mr Khatkar had duly been sent details of the hearing date.  Mr Khatkar did in fact ring up on the Monday morning (i.e. 31 January 2005).  On that occasion he said he had not received the letter from the tribunal (dated in October 2004) until the Friday before the hearing.  It so happened that Mr Khatkar had been intercepted two days before while importing beer into the UK.

21.	In those circumstances the Commissioners asked for their costs of attending the previous hearing we think that they are entitled to those costs.  Mr Khatkar could have notified the tribunal long before the Monday morning of the hearing.  He put forward no reason as to why he should not have attended that hearing.  Accordingly we award the costs of that hearing to the Commissioners.  The amount calculated by the Commissioners was £461 and we award that amount.

STEPHEN OLIVER QC
CHAIRMAN

RELEASED: 6 April 2005

LON/04/8030